Penson v Titan National Pty Ltd

Court of Appeal (NSW)|2015-10-27

r 2014, 21 November 2014 Before: Truss DCJ (1 May 2014); Truss DCJ (7 May 2014), Balla DCJ (1 August 2014), Gibson DCJ (19 August 2014), Gibson DCJ (9 October 2014), Gibson DCJ (21 November 2014) File Number(s): 2009/337626; 2014/17976; 2014/137439

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

The Costs Orders

The Costs Orders arose out of proceedings 2009/337626 (the Lease Proceedings) commenced in the District Court by Ms Penson and Aquaqueen International Pty Ltd (Aquaqueen). Ms Penson was a shareholder and director of Aquaqueen, which is now in liquidation. In the Lease Proceedings, Ms Penson and Aquaqueen sued Titan and Ms Wood-Weber for recovery of losses that Aquaqueen claimed that it had suffered as a result of entering into a lease with Titan. On 6 June 2011, Williams DCJ delivered reasons for dismissing the Lease Proceedings.
On 24 June 2011, Williams DCJ made costs orders in the Lease Proceedings against Aquaqueen and Ms Penson jointly and severally and ordered that those costs be paid on an indemnity basis from a date in February 2010, being a date on which Titan and Ms Wood-Weber had made an offer of compromise to Aquaqueen. There has been no appeal from the orders made by Williams DCJ on that date.
On 2 September 2013, a costs assessor issued a certificate of determination of costs in the sum of $111,416.95 and a certificate of determination of the costs of the costs assessment in the sum of $1,787.04, in respect of the costs ordered by Williams DCJ on 24 June 2011. On 11 December 2013, a costs review panel issued a certificate of determination of costs affirming the certificates issued on 2 September 2013. On 20 January 2014, Ms Penson and Aquaqueen commenced proceedings 2014/17976 in the District Court by way of appeal against the decision of the costs review panel (the Costs Appeal Proceedings).
In the meantime, on 5 December 2013, Titan and Ms Wood-Weber obtained a judgment based on the assessment certificate that had been issued on 2 September 2013. That judgment was entered in accordance with r 36.10 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which relevantly permits a costs assessor's certificate to be filed in fresh proceedings, whereupon judgment is entered in the amount stated in the certificate. However, the judgment of 5 December 2013 was subsequently set aside by reason of the fact that it had been filed while an appeal to the costs review panel was still pending.
On 7 May 2014, Titan and Ms Wood-Weber commenced proceedings 2014/137439 in the District Court in accordance with r 36.10 of the UCPR (the Costs Judgment Proceedings) in relation to the assessment certificate that had been issued on 2 September 2013. The Costs Judgment Proceedings were commenced by filing a form entitled "Registration Certificate of Judgment", which sought judgment in the sum of $111,416.95 and enforcement of an amount of $111,584.95. The sum of $111,584.95 included a registration filing fee of $168.
On 7 May 2014, judgment was entered in the Costs Judgment Proceedings in the sum of $113,203.99. The difference between that amount and the sum of $111,416.95 was the amount of the costs of the costs assessment, of $1,787.04. The circumstances in which that sum was added into the amount for which judgment was entered are not entirely clear, particularly given that that sum was not claimed in the form referred to above. However, Ms Penson complained that that addition was impermissible and that the judgment should have been limited to the amount of the certificate of determination of costs (see Kassem v Koutavas [2012] NSWSC 236). That appears to be the source of Ms Penson's complaint that led ultimately to a plethora of proceedings in the District Court concerning costs and the making of the Costs Orders, which are the subject of the Principal Proceedings.
That matter was addressed by Campbell AJA in reasons given by his Honour on 1 May 2015 for dismissing an earlier stay application made by Ms Penson, to which I shall refer below. [1] His Honour considered that the judgment that was entered by the District Court, for $113,203.99, was irregular. However, his Honour was also of the view that no trace of substantial injustice arose from the irregularity in the form of the order that was been entered. Rather, his Honour held that taking a point that there had been a single judgment for the combined amount of the costs assessed, plus the costs of the assessment, was "a technicality of the most arid kind". If judgment had been entered in the manner that accords with the decision in Kassem, there would still be exactly the same amount of money owing by Ms Penson. [2]
The circumstances in which the six Costs Orders arose may be summarised as follows: 1. On 1 May 2014, Truss DCJ dealt with a notice of motion filed in the Lease Proceedings by Ms Penson and Aquaqueen. With the consent of Titan and Ms Wood-Weber, the Court ordered that the judgment that had been obtained on 5 December 2013 be set aside. There was an order that the original assessment certificate, and the determination of the costs assessor concerning it, be removed from the document that had been filed by Titan and Ms Wood-Weber on 5 December 2013 and returned forthwith to their solicitors. Her Honour ordered Aquaqueen and Ms Penson to pay the costs of Titan and Ms Wood-Weber of the motion from 7 April 2014 to 1 May 2014 on a party-party basis. 2. On 7 May 2014, Truss DCJ determined an application for security for costs made by Titan and Ms Wood-Weber in the Costs Appeal Proceedings. Her Honour ordered that an amount of $20,000 be paid by Ms Penson into Court as security for the costs of the Costs Appeal Proceedings. 3. On 1 August 2014, Balla DCJ dismissed a motion of 25 July 2014 filed by Ms Penson and Aquaqueen seeking a stay of the Costs Judgment Proceedings. Balla DCJ ordered Ms Penson and Aquaqueen to pay the costs of the motion on an indemnity basis. 4. On 19 August 2014, Gibson DCJ made orders in the Lease Proceedings, the Costs Appeal Proceedings and the Costs Judgment Proceedings: 1. First, in the Lease Proceedings, her Honour ordered (inter alia) that Aquaqueen and Ms Penson pay the costs of the Costs Appeal Proceedings, and subsequent applications, including notices of motions in all three sets of proceedings, on an indemnity basis. Her Honour ordered Ms Penson and Aquaqueen to pay a total gross fixed sum of $77,747.78, giving credit for the $20,000 security for costs paid into Court, making a judgment sum of $57,747.78. 2. Secondly, in the Costs Judgment Proceedings, her Honour ordered that various notices of motion be dismissed, and made orders relating to costs (relevantly that any costs payable by Aquaqueen and/or Ms Penson be paid in accordance with her Honour's judgment of the same day in the Lease Proceedings or with Balla DCJ's judgment of 1 August 2014). 3. Thirdly, in the Costs Appeal Proceedings, her Honour similarly ordered that various notices of motion be dismissed and made orders relating to costs (in the same manner as in the Costs Judgment Proceedings). 1. Subsequently, on 25 August 2014, Aquaqueen and Ms Penson filed a further notice of motion in the Lease Proceedings, seeking a stay of the orders made on 19 August 2014. On 9 October 2014, Gibson DCJ ordered that the notice of motion be dismissed and ordered Aquaqueen and Ms Penson to pay the costs of Titan and Ms Wood-Weber on an indemnity basis in a gross sum of $5,700. 2. Aquaqueen and Ms Penson then filed a notice of motion in the Costs Judgment Proceedings seeking a stay of the orders made on 9 October 2014. On 21 November 2014, Gibson DCJ ordered that that motion be dismissed and ordered Aquaqueen and Ms Penson to pay the costs of the motion in a gross sum of $2,000.

The Principal Proceedings

The Principal Proceedings were commenced on 23 February 2015, when Ms Penson filed a summons seeking leave to appeal from the Costs Orders (a notice of intention to appeal having been filed on 19 December 2014). On 20 April 2015, Ms Penson filed an amended summons seeking leave to appeal. On the same day, she filed a draft notice of appeal. I shall deal below with the grounds in the draft notice of appeal.
On 13 April 2015, Ms Penson filed a motion in the Principal Proceedings seeking a stay of the Costs Orders (the First Stay Application). As I have said, the First Stay Application was heard and determined by Campbell AJA on 1 May 2015. For reasons given ex tempore on that day, his Honour dismissed the First Stay Application. One of the bases upon which his Honour declined to grant a stay was his provisional conclusion that the proceedings had little prospects of success, because the proceedings were then framed as an appeal under s 127 of the District Court Act 1973 (NSW). There is no appeal under s 127 from a costs order.
On 3 August 2015, Ms Penson filed a document entitled "Further Amended Summons to Appeal or Seeking Leave to Appeal" (the Further Amended Summons). By the Further Amended Summons, she seeks judicial review of the Costs Orders under s 69 of the Supreme Court Act 1970 (NSW), as well as seeking leave to appeal from the Costs Orders. That is the summons now fixed for hearing on 3 December 2015.
Ms Penson provided me with a copy of her written submissions filed on 28 August 2015 in support of the relief that she claims in the Principal Proceedings. I have considered those submissions as well as the Further Amended Summons filed on 3 August 2015 and the draft notice of appeal filed on 20 April 2015.
The Further Amended Summons is said to be brought pursuant to s 69 of the Supreme Court Act and, in the alternative, pursuant to s 127 of the District Court Act. It seeks orders that the Costs Orders (made variously by Gibson DCJ, Balla DCJ and Truss DCJ), as well as a decision of Gibson DCJ on 8 August 2014, be quashed; that the orders made on those dates be set aside; and that "the matter" be remitted to the District Court to be determined in accordance with law. In the alternative, it seeks leave to file a draft notice of appeal and that the appeal be allowed with costs.
In her draft notice of appeal filed on 20 April 2015, Ms Penson relies on the following grounds: Her Honour did not appreciate and did not give weight to the fact that the hearing on 21 November 2014 relates to the prior supposed hearing and the orders made on 9 October 2014 in the absence of Ms Penson when the absence had been pre-notified to the court and the Associate to Her Honour with full explanations and request to vacate and re-schedule that hearing. Her Honour did not appreciate and did not give weight to the fact that the hearing conducted in the absence of Ms Penson had encapsulated a number of the previously unheard Notices of Motion and part-heard Notices of Motion as well [as] the costs in association with those proceedings, which had been sought to be heard by Ms Penson since May 2014 and involved significant costs approximately double of the judgment costs initially claimed by the respondents. Her Honour erred in giving weight to the submission of Ms Perry that Judge Balla had heard more than one Notice of Motion on 1 August 2014. Her Honour erred in giving weight to the smallness of monetary difference rather than the principle of error in law in her decisions of the costs assessment appeal. Her Honour erred in declining to deal with the costs consequences of respondents' application for the summary dismissal of the costs assessment appeal, which was in fact not summarily dismissed and was fully heard by Her Honour. Her Honour erred in concluding without hearing and by dismissing all the unheard and part-heard Notices of Motion and ordered all costs associated with such Notices of Motion proceedings to be paid by Ms Penson. Her Honour did not give weight to r 36.16 in the matters taken to her pursuant to the rule. Her Honour erred in r 56.1 in not affording Ms Penson the "just" solutions. It is not clear which judge was referred to as "her Honour" in those grounds, although most of them appear to be consistent with Ms Penson's written submissions in relation to the decision of Gibson DCJ of 21 November 2014.
It is not possible to discern any arguable ground in the draft notice of appeal. The submissions of 28 August 2015 purport to set out at some length the history of the proceedings in the District Court. They make a series of complaints about the conduct of those proceedings, many of which relate to allegations of bias by judicial officers and matters of procedural fairness. One such complaint, which was addressed by Campbell AJA in his Honour's decision on the First Stay Application and which related to a notice of motion filed by Ms Penson on 25 August 2014, is in the following terms: It was first listed on 26 Sept, then Supreme Court made a special fixture hearing for the parties on 26 Sept, which would prevent at least Ms Perry [solicitor for the respondents] to attend the District Court as I was represented by counsel in the Supreme Court at that time and did not have to be there. I thought it better in the circumstance to re-list the matter in the District Court, for the convenience of both parties but especially that of Ms Perry. Accordingly I informed the court with a request to re-list to 9 October. Then, immediately prior to 24 Sept, Ms Perry brought a surprise interlocutory in the Supreme Court, which was instantly heard on 24 Sept and consequentially adjourned the hearing in the Supreme Court to 10 October. Further ripple effects of this meant that the urgent business affairs put on hold by Ms Penson could not be delayed any longer and she had to fly out of Australia quickly in order to return in time for the Supreme Court hearing. Accordingly, Ms Penson informed District Court with full explanation and supporting information to request re-listing from 9 October to a later date convenient to the court. Ms Penson was concerned about not receiving confirmation for the relisting and even visited the Duty Registrar on the day of leaving Australia, on 3 October, to personally explain why she could not attend court on 9 October. Apparently, the hearing was conducted on 9 October in the absence of Ms Penson and the decisions made included costs orders in favour of Ms Perry's clients on indemnity basis. However, Campbell AJA recorded, in relation to the same notice of motion: [3] [35] Ms Penson asked for the return date of the notice of motion to be changed because it was inconvenient to her. The return date was then altered to 5 October 2014. The hearing was then adjourned to 9 October 2014. On 26 September 2014, Ms Penson advised the respondents and the court that she had to travel overseas for business on Friday 3 October 2014 for approximately a week. She supported her need to travel overseas by an email in the Chinese language which in the material which she supplied to the court was translated only by Ms Penson. The judge's associate happened to understand the Chinese language, and supplied the judge with a translation which differed from Ms Penson's, and which did not reveal any urgency requiring Ms Penson to travel to China. More importantly than this, before her departure Ms Penson was provided with a copy of the decision of the Court of Appeal in Roskott v Commonwealth Bank of Australia [[2014] NSWCA 341] which sets out the sort of material the court usually requires before it will adjourn a hearing on the basis of the asserted inability of an applicant to be present. [36] On 9 October 2014, Ms Penson's notice of motion of 25 August 2014 was listed for hearing. Ms Penson was not present. Evidence of the type identified in Roskott had not been filed. Judge Gibson dismissed the notice of motion and ordered Aquaqueen and Ms Penson to pay the costs of Titan and Ms Wood-Weber on an indemnity basis in the lump sum of $5,700.
Ms Penson also, of course, submits that the principle in Kassem v Koutavas has not been observed. I have dealt with that matter above (at [8]-[9]). I have not been able to discern any grounds upon which any of the Costs Orders should be quashed. In the circumstances, it is difficult to conclude that Ms Penson has any prospects of success in the Principal Proceedings. That would be a basis for concluding that there were no prospects of obtaining a stay of the Costs Orders, if the Second Stay Application had not been abandoned.

Abandonment of the Second Stay Application

I commenced the hearing of the Second Stay Application during the morning of 14 September 2015 and continued until mid-afternoon. During the course of the hearing, Ms Penson accepted that, even if she is totally successful in her relation to her challenges to the Costs Orders, she will still have a liability to pay to Titan and Ms Wood-Weber the sum of $111,416.95, representing the assessment of the costs ordered by Williams DCJ on 24 June 2011 (which orders are not appealed from). I asked Ms Penson whether she would submit to a term of any stay of the Costs Orders that she either pay into Court or provide security for the sum of $111,416.95. I indicated to her that my provisional view at that stage was that the only basis upon which I would contemplate a stay would be on terms that such an amount be paid into Court or be the subject of security.
Ms Penson declined to make any offer in relation to the costs ordered by Williams DCJ. At that stage, some hours after the hearing had begun, Ms Penson drew my attention to earlier proceedings in the Court, in which I sat with the President (Aquaqueen International Pty Ltd v Weber [2014] NSWCA 101). In those proceedings, the President and I made orders on 20 March 2014 that a summons filed by Aquaqueen seeking leave to appeal from orders made in the Equity Division be dismissed with costs. We also ordered that prayer 2 of a notice of motion filed by Aquaqueen on 17 March 2014 be refused and, to that extent, be dismissed with costs.
In relation to the lateness of Ms Penson's raising this issue, the following exchange occurred: HIS HONOUR: It's very late in the piece to raise these matters. APPLICANT: I wasn't allowed earlier on. HIS HONOUR: You could have raised it at any time. APPLICANT: I am sorry, I did not know I was coming before you until I actually asked how you spell your name.
Ms Penson then asked me to recuse myself on the basis that there would be an apprehension of bias on my part by reason of my having participated in making those orders against Aquaqueen in 2014. The bases provided by Ms Penson for her application for recusal were that, first, the President and I ruled against Aquaqueen in 2014; second, one of the grounds for ruling against Aquaqueen related to the principles in Kassem v Koutavas, which were also relevant to the Second Stay Application; third, there is a connection between Aquaqueen and her in that Aquaqueen is her company; fourth, she felt "quite intimidated" during the hearing in 2014.
I did not consider that the issues raised in the earlier proceedings were such that there would be any apprehension of bias on my part in relation to the Second Stay Application. I therefore declined to recuse myself. There were no matters of credit raised in those earlier proceedings; instead, they dealt with issues of law. The mere fact that a judge decides against a party does not render that judge biased against that party in later proceedings; a suggestion otherwise would move "perilously close to the fallacious argument that because one side lost the litigation the judge was biased". [4] Further, the matter of Kassem v Koutavas arose in the context of the decision sought to be appealed from, [5] in which Garling J, having had lengthy regard to provisions of the Legal Profession Act 2004 (NSW), reached a conclusion inconsistent with Kassem v Koutavas. However, his Honour then considered as a matter of discretion (assuming Kassem to be correct) whether the costs judgment at issue nonetheless ought to be set aside as an irregularity. It was the exercise of that discretion that was at issue in the 2014 proceedings, and the Court was not persuaded that that exercise of discretion had miscarried.
After I indicated that I would only be prepared to consider a stay on terms that Ms Penson pay the sum of $111,416.95 into Court or provide security for that sum, the respondents indicated, through Mrs Christine Perry, their solicitor, that they would not regard a stay on such terms as acceptable. Rather, they sought to press for dismissal of the Second Stay Application. In the circumstances, I adjourned the hearing of the Second Stay Application to 21 September 2015 and directed that the respondents notify Ms Penson of all of the material upon which they wish to rely in opposing the application by 16 September 2015.
When the matter was called on for hearing again on 21 September 2015, Ms Penson informed the Court that she wished to discontinue the Second Stay Application if it was not to be heard by a different judicial officer. I confirmed that I did not propose to recuse myself. After further interchange, Ms Penson stated that she wished to "discontinue" the Second Stay Application if it was not to be heard by another judge. I indicated to Ms Penson my view that the UCPR do not appear to provide for discontinuance of an interlocutory application such as the Second Stay Application.
Rule 12.1 of the UCPR provides: (1) The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief in so far as they concern a particular defendant: (a) with the consent of each other active party in the proceedings, or (b) with the leave of the court. […] (5) For the purposes of this rule, proceedings on a cross-claim are taken to be different proceedings to the proceedings on the originating process and to proceedings on any other cross-claim. There is a similar provision in relation to appeal proceedings in r 51.56, although no consent is required for the discontinuance of such proceedings.
Thus, while the UCPR contemplate the discontinuance of appeal proceedings, they do not appear to contemplate discontinuance of an interlocutory application made in such proceedings. The language of the applicable rules, as referred to above, makes clear that the relevant "proceedings" are those commenced by an originating process; in this case, it is Ms Penson's Further Amended Summons. There is good reason for such a distinction. Discontinuance of appeal proceedings would not ordinarily give rise to res judicata or issue estoppel (consistently with what is explicitly provided in r 12.3; see also the note to r 51.56(6)), whereas the dismissal of such proceedings could have that consequence. However, the dismissal of an interlocutory application could not give rise to an issue estoppel or res judicata. Thus, it could not have been suggested that the dismissal of the First Stay Application by Campbell AJA was a legal bar to Ms Penson's commencement and prosecution of the Second Stay Application. On the other hand, of course, the rejection of an earlier application would be a factor relevant to the exercise of discretion in a later application.
I indicated to Ms Penson that, if she did not wish to continue with the Second Stay Application, and in the circumstance that the UCPR did not contemplate the dismissal of such an application (and in the further circumstance that Ms Penson did not want to discontinue the Principal Proceedings), I would order that the Second Stay Application be dismissed. When she confirmed that she did not wish to proceed, I ordered that the notice of motion of 8 September 2015 be dismissed.
The issue of the costs of that notice of motion then arose. (It should be noted, further to the comments above, that there is no relevant difference between the rules attending the costs of proceedings that have been discontinued and those that have been dismissed: see UCPR rr 42.19 and 42.20.) Mrs Perry indicated that the respondents wished to make an application for indemnity costs and for an order that a gross sum be paid for such costs. Accordingly, I gave directions for the filing of evidence in support of that application and adjourned the matter for further hearing on 28 September 2015.
Subsequently, on 22 September 2015, Ms Penson filed a notice of discontinuance of the Second Stay Application. In the first line under the heading "Notice Details", Ms Penson had modified the pro forma language of "The Plaintiff/Applicant discontinues the whole of these proceedings" to "The Plaintiff/Applicant discontinues the Notice of Motion filed 8 September only". The document also stated that the notice of discontinuance had been "heard by the court and granted on 21.09.2015". Whether or not those statements arose from a misunderstanding on the part of Ms Penson, it is clear that they are incorrect. Since the Second Stay Application had already been dismissed, that document had no effect or consequences. Consequently, it should be removed from the court file pursuant to r 4.15 of the UCPR. The document is both irrelevant and has the potential to cause confusion about the conduct of these proceedings.

Prospects of Success of the Second Stay Application

Notwithstanding that Campbell AJA concluded that this Court has no jurisdiction to hear an appeal from the Costs Orders, Ms Penson subsequently filed the Further Amended Summons, by which she purports to continue to prosecute an application for leave to appeal from the Costs Orders. She seeks a stay of the Costs Orders notwithstanding the refusal of the First Stay Application by Campbell AJA. Ms Penson contended before me that, because she now seeks judicial review of the Costs Orders under s 69 of the Supreme Court Act, the basis upon which Campbell AJA dismissed the First Stay Application is no longer applicable and that there should be no impediment to her continuing to seek a stay of the Costs Orders. However, there are other reasons why the Second Stay Application would have been refused had it been pressed.
In the Principal Proceedings, Ms Penson seeks to challenge, and otherwise impugn, the Costs Orders. Significantly, however, there is no challenge to the order for costs made by Williams DCJ on 24 June 2011. Further, as I have said, Ms Penson accepts that, even if she is totally successful in her relation to her challenges to the Costs Orders, she will still have a liability to pay to the respondents the sum of $111,416.95, representing the assessment of costs ordered by Williams DCJ on 24 June 2011. She has failed to make any arrangements for paying or securing the payment of that sum.
Ms Penson also sought to justify the making of the Second Stay Application because the respondents had threatened to enforce the Costs Orders by proceedings for a charging order in respect of property owned by her. Ms Penson said that those threats constituted a change of circumstances from those in existence at the time of the First Stay Application.
It was always open to the respondents to take steps for the enforcement of the Costs Orders. No doubt it was the possibility of such steps being taken that prompted Ms Penson to commence the First Stay Application. The fact that the possibility of enforcement proceedings may have become a reality is not a change of circumstances such as would justify a further application for a stay.
Ms Penson wrote to the respondents on 17 September 2015, asserting that the Second Stay Application was a direct result of attempts on their behalf to enforce the Costs Orders. In the letter, she asserted that she has a "constitutional right" to the judicial review that has been fixed for hearing on 3 December 2015 and that it "reasonably follows" that the Costs Orders should be stayed pending determination of the judicial review. She also asserted that the attempted enforcement of the Costs Orders was "hinging on an abuse of process".
In the letter of 17 September 2015, Ms Penson proposed the following: 1. a stay as sought in the Second Stay Application, without any order for costs; 2. discontinuance of the Second Stay Application, without any order for costs; or 3. discontinuance of the motion filed by the respondents on 28 August 2015, without any order for costs, or on other conditions proposed by the respondents. The motion of 28 August 2015 sought summary dismissal of Ms Penson's proceedings as incompetent. A direction has been given that that motion be heard concurrently with the Principal Proceedings on 3 December 2015.
It is not entirely clear what Ms Penson was proposing by her letter of 17 September 2015. It is tolerably clear that she was indicating that she would not proceed with the Second Stay Application if the respondents agreed to forgo their costs. However, Mrs Perry says that the letter of 17 September 2015 was not received by her until 22 September 2015. Ms Penson also sent an email to Mrs Perry on Sunday, 20 September 2015. Mrs Perry says that because it was sent outside office hours, and because she travelled straight from her office to the Court on the morning of 21 September without checking her emails in order to meet her court listing, she did not see the email before the commencement of the hearing before me on that day. As I have already said, Ms Penson abandoned the Second Stay Application on 21 September 2015. Having regard to the above matters, she did so without prior notice to Titan and Ms Wood-Weber.
On 26 June 2015, Campbell AJA ordered Ms Penson to pay the costs of the First Stay Application in a gross sum assessed at $11,800. [6] The solicitors for the respondents have made demand on Ms Penson for payment of that sum, but nothing has yet been paid in respect of it.
In the light of the dismissal of the First Stay Application, the failure to pay the costs ordered by Campbell AJA and the refusal to make any arrangements for paying or securing the costs ordered by Williams DCJ, I do not consider that the Second Stay Application had any significant prospect of success. There had been no relevant change in circumstances that would justify the further application for a stay.

The Costs of the Second Stay Application

By the Costs Motion, Titan and Ms Wood-Weber claim:

an order that costs be paid on an indemnity basis;
an order that the costs of the Second Stay Application and of the Costs Motion be paid as a gross sum under s 98(4)(c) of the Civil Procedure Act 2005 (NSW);
an order for the payment of interest under s 101(5) of the Civil Procedure Act; and
an order under r 12.4 of the UCPR that no further proceedings for a stay of the Costs Orders be made pending payment of the costs in the sum of $11,800 ordered by Campbell AJA on 26 June 2015 and payment of any costs of the Second Stay Application.

The Costs Motion was supported by affidavits sworn by Mrs Perry on 23 September 2015, 16 October 2015 and 23 October 2015. Ms Penson relied on affidavits affirmed by her on 11 September 2015, 18 September, 9 October 2015 and 25 October 2015. Exhibits to those affidavits were also tendered and admitted and marked "CLP2", "SP1" and "SP3".
A considerable amount of time was taken in endeavouring to deal with objections to all affidavits. It is fair to say that there was a great deal of material in all the affidavits which was inadmissible. I have treated most of the material as being submissions. Much of the material would have very little weight if admitted.
Ms Penson particularly objected to material consisting of correspondence and other documents emanating from the liquidator of Aquaqueen (the Liquidator). On 3 March 2015, the Liquidator wrote to Ms Penson. After asserting that Ms Penson had breached various provisions of the Corporations Act 2001 (Cth), he said, inter alia, the following in relation to Aquaqueen: I note that it appears the Company is the registered owner of the relevant trademarks pertaining to "Aquaqueen" and "Miniwater". Additionally, I have been provided with a copy of the Company's financial statements as at 30 June 2014. I note that the financial statements disclose plant and equipment of $247,825 (net of depreciation). I have formally sought the assistance of the Australian Securities and Investments Commission … However, if you comply with your relevant duties to assist me then I intend to inform ASIC of such compliance. You may comply with your ongoing obligations, … by doing the following: • confirm the location of the Company's assets, including its plant and equipment and providing me with access to same; • provide full details of the transfer of the relevant trademarks pertaining to "Aquaqueen" shortly prior to my appointment; […]
On 30 April 2015, the Liquidator wrote to Ms Penson again. After referring to the earlier correspondence, including his assertion that Ms Penson was in breach of various provisions of the Corporations Act, the Liquidator went on to say: Of specific concern to me is the following: • You have not provided me with the location of the Company's plant and equipment; • You have not stated whether the Company has any employees; and • Various trademarks and websites may have been transferred from the Company to Aquaqueen Australia Spring Water Pty Ltd (a business that appears to be operated by your son). I note that you are the former director, secretary and sole shareholder of this company. […] I understand that the Australian Securities and Investments Commission has recently written to you directly in relation to your breaches of the Act. I intend to inform ASIC that you are suspected of engaging in "phoenix activity" [which refers to the intentional transfer of assets from an indebted company to a new company in order to avoid paying creditors] in due course. As previously advised, you may comply with your ongoing obligations, … by doing the following: • confirm the location of the Company's assets including its plant and equipment and providing me with access to same; • provide full details of the transfer of the relevant trademarks pertaining to "Aquaqueen" shortly prior to my appointment; […]
The matters raised by the Liquidator tend to indicate the difficulties that might be experienced in recovering costs from Ms Penson. That is to say, the allegation that Ms Penson has shown a reluctance to cooperate with the Liquidator in disclosing the whereabouts of assets of Aquaqueen may justify an apprehension that she would not cooperate in disclosing her own assets in connection with the enforcement of orders for costs made against her.
No attempt was made to justify the admissibility of the documents emanating from the Liquidator to prove the truth of the assertions made in them. Nevertheless, the fact that the assertions were made is relevant to the question of whether it is appropriate to order costs in a gross sum, rather than risk the further costs and delays that might result from the necessity of assessing costs as suggested by the history of the proceedings in the District Court.
In her affidavit sworn on 23 September 2015, Mrs Perry says that Ms Penson has been ordered by the District Court, the Supreme Court and the Court of Appeal to pay various amounts of costs on which interest has accrued. The total amount of costs is $276,858.61. The total amount of interest as at 12 August 2015 was $18,588. None of that has been paid and no security has ever been offered in relation to any of the Costs Orders. Mrs Perry also says in her affidavit that Titan and Ms Wood-Weber have incurred costs of $2,234.04 in the enforcement of various costs orders made in their favour against Ms Penson.
The proceedings in the District Court briefly outlined above, and explained in more detail in the reasons of Campbell AJA, suggest that it is likely that assessment of the costs of the Second Stay Application would not be straightforward and that not insignificant costs would be likely to be incurred before a final determination of the quantum of costs is made.
The Second Stay Application was served on 8 September 2015. On 9 September 2015, Mrs Perry wrote to Ms Penson saying that there had been no material change of any relevant fact since the judgment of Campbell AJA that would warrant a further stay application and that the Second Stay Application was an abuse of process. Mrs Perry invited Ms Penson to discontinue the Second Stay application without any order for costs and indicated that Ms Wood-Weber and Titan would consent to such discontinuance. The offer was to remain open to 9 am on 14 September 2015. Mrs Perry said in her letter that, if the offer was not accepted, Titan and Ms Wood-Weber would seek an order that the Second Stay Application be dismissed with costs on an indemnity basis.
I heard oral argument on the Costs Motion on 27 October 2015. At the commencement of her oral submissions, Ms Penson complained about the late filing of a notice of appearance in the Principal Proceedings by Titan and Ms Wood-Weber. For reasons that have not been explained, no notice of appearance was filed on their behalf until 22 October 2015. However, Ms Penson was unable to point to any prejudice flowing from the failure to file a notice of appearance. She had had no difficulty in serving materials on Mrs Perry, who had acted for Titan and Ms Wood-Weber in the proceedings in the District Court since 2009. The matter appears to have no bearing on the question presently before me.
Another complaint raised by Ms Penson concerned the costs of a licence agreement entered into between Titan and Aquaqueen. She complained that Aquaqueen had paid the sum of $3,900 on account of solicitors' costs, but received no itemised account. That matter appears to have no relevance to the question before me.
A related reason advanced by Ms Penson as to why orders for costs should not be made against her is that she asserts that Titan and Ms Wood-Weber are in debt to her or to Aquaqueen in various amounts. She sought an adjournment of the hearing of the Costs Motion until after the return of a notice to produce. I declined the adjournment on the basis that any material produced to show indebtedness on the part of Titan and Ms Wood-Weber would be irrelevant to the question of any order for costs. Such indebtedness may be relevant to the question of enforcement of any order. That, however, is not the question presently before me.
In written submissions in support of the Costs Motion, the respondents submit that the Second Stay Application had no prospects of success and that it is the most recent of a series of stay applications filed by Ms Penson in the District Court, Supreme Court and Court of Appeal. They say that Ms Penson's true intention has been to delay the enforcement of costs properly ordered against her, and that, in that regard, her conduct has been vexatious. That is particularly so in circumstances where Ms Penson has not offered to pay any part of the amount of $111,416.95 which was ordered against her and which has not been appealed from.
In her written submissions, Ms Penson says that the filing of the Second Stay Application was triggered by five writs issued against her by Titan in the District Court. It was only sought to be discontinued because of the "extraordinary and unexpected circumstance" that I was to hear the Second Stay Application in the context of having sat last year on an application by Aquaqueen for leave to appeal that was dismissed. She asserts that she has only participated in the hearing of the Costs Motion "under duress" on the basis that, if she did not participate, the costs sought by the respondents would inevitably be granted. She says that she has complied with directions made by the Court, but otherwise does not respond to the matters submitted by the respondents in support of their claim for a costs order in a gross sum. (However, in her affidavit of 11 September 2015, she says that many of the costs incurred throughout the history of the proceedings in the District Court and costs assessment have been due to the conduct of the solicitors for the respondents.)
Costs may be ordered on an indemnity basis where an action has been commenced in circumstances where the moving party, properly advised, should have known that it had no chance of success. [7] Unlike the circumstances of an earlier application in the Equity Division (in which indemnity costs were not awarded) to which Ms Penson draws attention, [8] in the present case, Ms Penson filed her Second Stay Application in very similar form to the First Stay Application, in circumstances where the First Stay Application was dismissed largely on the basis that the prospect of successfully appealing from the Costs Orders (even apart from the jurisdictional issue noted above) was "to put it at its highest, extremely thin". [9] The Second Stay Application should never have been brought. In all the circumstances, I am satisfied that this is an appropriate case for an order of indemnity costs.
In relation to the application for a gross sum costs order, it is well established that such an order may be made in circumstances where it is desirable to avoid the expense and delay of further proceedings involving costs assessment. [10] Having regard to the difficulties experienced by Titan and Ms Wood-Weber in enforcing costs orders against Ms Penson, and in the light of the extremely lengthy proceedings outlined above, I consider that it is appropriate that the costs of the Second Stay Application be ordered in a specified gross sum.
On 9 September 2015, Mrs Perry wrote to Ms Wood-Weber and Titan, proposing a costs agreement in connection with the Second Stay Application. That proposal was accepted. On 22 September 2015, Mrs Perry sent to Ms Wood-Weber and Titan an invoice in the sum of $11,129.40 for her costs and disbursements in connection with the Second Stay Application, based on her charge out rate of $500/hour. Attached to the invoice is a schedule containing a detailed description of the work performed by Mrs Perry and the costs for that work. The invoice shows a total amount for fees of $9,100 and an amount for disbursements of $1,098, together with GST of $931.40. The schedule includes an item of $1,000 for anticipated attendance on 28 September 2015 to deal with the Costs Motion, as well as $950 worth of costs that were incurred after the Second Stay Application was dismissed on 21 September 2015. Further, the disbursements are all dated 22 September 2015 and appear to relate to the Costs Motion. I do not consider that any of those costs is unreasonable, but the costs incurred in relation to the Costs Motion should not be counted towards the costs of the Second Stay Application. Further, Mrs Perry says that Ms Wood-Weber, who has so far paid all the costs of the respondents, has no entitlement for any imputation credit in respect of GST. For that reason, the respondents would be entitled to a costs order that includes GST. [11]
Mrs Perry says that, in her capacity as an accredited specialist in commercial litigation and having practised in that area for in excess of 20 years, costs have generally been allowed and assessed on an ordinary basis in the order of at least 75% of actual costs incurred and up to 100% on an indemnity basis. In earlier proceedings involving the respondents and Ms Penson, a rate of 70% had been applied for costs on an ordinary basis and 95% for costs on an indemnity basis.
In her written submissions, Ms Penson submits that the respondents' claim for costs in excess of $11,000 is "grossly excessive and unwarranted". She says that the same evidence was relied on for the Second Stay Application as was relied on for the First Stay Application. Further, she has been prepared to forgo her costs, by reference to the offers of compromise forwarded to Mrs Perry. She otherwise does not dispute the particular figures submitted by Mrs Perry as representing the respondents' costs of the Second Stay Application.
Mrs Perry's affidavits of 16 October 2015 and 23 October 2015 deal primarily with the costs incurred in connection with the Costs Motion. In the former, she deposed that there had been, or would be, further costs of $2,035 (including GST). Those costs are not costs of the Second Stay Application. I am not persuaded that there is a basis for ordering that those costs be paid on an indemnity basis. However, for the reasons indicated above, it is desirable that they be ordered in a fixed sum.
Next, the respondents claim interest under s 101(5) of the Civil Procedure Act (presumably a reference to s 101(4)); such interest will not be applicable unless the Court expressly so orders. [12] It is usually appropriate to allow interest on costs, from the date that they are actually paid. [13] Given the history of this matter, I consider that the payment of interest is appropriate. In the present case, it is not clear whether the costs of the Second Stay Application have been paid, but the invoice issued by Mrs Perry on 22 September 2015 in respect of those costs requested payment by 6 October 2015. As at the date of the hearing of the Costs Motion, the costs of that motion had not yet been billed. Interest, applying only to the specified gross sums, should run from the date when the respondents pay to Mrs Perry's firm, Pure Legal, the costs of the Second Stay Application and of the Costs Motion, until the date that the specified gross sums are paid by Ms Penson.
Finally, the respondents claim an order under r 12.4 of the UCPR that no further proceedings for a stay of the Costs Orders be made pending payment of the costs in the sum of $11,800 ordered by Campbell AJA on 26 June 2015 and payment of any costs of the Second Stay Application. That rule provides that, if a plaintiff is liable to pay another party's costs of discontinued proceedings, and then commences similar proceedings against that other party before paying those costs, the court may stay those further proceedings until the costs are paid. Of course, that rule has no application to the Second Stay Application, which was not discontinued but dismissed; however, there is an equivalent rule in relation to dismissed proceedings in r 12.10. There has in fact been a third stay application filed by Ms Penson in relation to the Costs Orders, and it has been fixed for hearing on 3 December 2015 together with the Principal Proceedings. In those circumstances, and having regard to the fact that no argument was advanced in support of this claim, either in written submissions or orally, I do not consider that it is appropriate to make such an order.

Conclusion

Ms Penson should be ordered to pay the costs of Titan and Ms Wood-Weber of the Second Stay Application on the indemnity basis. I also consider that it is appropriate that those costs be ordered as a specified gross sum. I consider that the appropriate gross sum of the costs up to the time of dismissal of the Second Stay Application is $7,250. I consider that an appropriate gross sum for the costs of the Costs Motion, including the costs itemised in relation to the Second Stay Application but in fact incurred in connection with the Costs Motion, is $4,000. The orders that I propose to make are as follows: 1. The "Notice of Discontinuance" filed on 22 September 2015 in proceedings 2015/231328 be removed from the court file, pursuant to r 4.15 of the Uniform Civil Procedure Rules 2005 (NSW). 2. The applicant on the notice of motion filed on 8 September 2015 pay to the respondents to that motion the sum of $7,250 as a specified gross sum, pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW). 3. The respondent to the notice of motion filed on 23 September 2015 pay to the applicants on that motion the sum of $4,000 as a specified gross sum, pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW). 4. The applicant on the notice of motion filed on 8 September 2015 pay interest on the costs stated in orders (2) and (3) above at the rates prescribed from time to time for the purposes of s 101 of the Civil Procedure Act 2005 (NSW), such interest to commence to run when the respondents have paid to Pure Legal the costs of the motion filed on 8 September 2015 and of the motion filed on 23 September 2015.

Endnotes

Penson v Titan National Pty Ltd (No 2) [2015] NSWCA 120 at [68]-[72].
[2015] NSWCA 120 at [72].
[2015] NSWCA 120 at [35]-[36].
Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; 244 CLR 427 at [67].
Weber v Aquaqueen International Pty Ltd; Aquaqueen International Pty Ltd v Weber [2013] NSWSC 1181.
See Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121.
See, eg, Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff (No 2) [2009] NSWCA 12 at [4].
In the matter of Aquaqueen International Pty Ltd [2015] NSWSC 500.
[2015] NSWCA 120 at [87].
See, eg, Hamod v State of New South Wales [2011] NSWCA 375 at [813]-[820].
See Gagner Pty Ltd t/as Indochine Café v Cantouri Corporation Pty Ltd [2009] NSWCA 413 at [149]-[154].
Spedding v Nobles (No 2) [2007] NSWCA 87 at [14]-[15].
See Lahoud v Lahoud [2006] NSWSC 126 at [82]-[83]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 November 2015

Legal Profession Act 2004(NSW)

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